Corbett hits budget homestretch with lots at stake

HARRISBURG, Pa. — It may be going too far to say Gov. Tom Corbett’s political future rests on what happens in Harrisburg over the next two weeks, but there’s no disputing he has a lot at stake.

The governor’s first two budgets were enacted despite a staggering drop-off in state revenues, austerity-driven spending plans that generated backlash that he continues to feel, reflected in weak polling numbers and a widening field of Democrats hoping to unseat him.

By now the state’s financial picture has brightened a bit, and just a few days ago his Republican allies in the state House, without a single Democratic vote, approved a $28.3 billion spending plan that closely mirrored his own proposal. Spending would increase by $500 million, businesses would get substantial tax cuts and education spending would see modest growth.

This year’s budget battle involves even more moving parts than usual, and how it all comes together — or doesn’t — could be a major topic during next year’s campaign, when Corbett is expected to seek a second four-year term.

Advertisement

“Oh, it is all still unresolved, as it normally is this time of the month,” Senate Majority Leader Dominic Pileggi, R-Delaware, said Friday. “But I would say on the core budget we are farther ahead this year at this time than we were last year at this time.”

The first two budgets under Corbett passed June 30, the last day of the state’s fiscal year, despite the tough financial times. He has repeatedly touted that as a significant accomplishment, but he would need to repeat that this year and next if it is to mean anything on the campaign trail.

His budget secretary, Charles Zogby, said Friday the challenge is finding ways to make up for hundreds of millions of dollars in projected revenues that have not materialized this year, and may not next year, either.

Spending cuts are part of the solution, Zogby said, but the administration also is considering other ways to boost general fund revenues, possibly by backing off an expected reduction of the capital stock and franchise tax, or by diverting money from other sources, such as a portion of the realty transfer tax currently earmarked for environmental and parks projects under the Keystone Fund.

The governor has been pressing for transportation infrastructure spending, and last week the state Senate voted overwhelmingly in favor of a $2.5 billion-a-year package for roads, bridges and mass transit, a plan considerably more expensive than what Corbett has proposed. Both approaches would impose higher wholesale taxes on gasoline, ultimately paid by motorists.

Not raising taxes has been a mantra of Corbett’s, so signing on to the higher gasoline taxes, larger fines and fees that undergird the Senate plan could dilute what has been a key element of his political messaging.

It’s hard to say how either approach will fare in the House, where tax increases are anathema to the conservative majority of the Republican caucus.

Also in the mix is a set of changes the governor wants to the two large public employees’ pension systems. The pension issue has not exactly lit up the Legislature, although Corbett remains committed. Any changes he gets to public pensions would be prime fodder for his 2014 campaign speeches and ads.

Finally, there’s the privatization of the state-controlled wine and liquor store system. In March, Corbett’s Republican allies in the House, again with no Democratic votes, sent the Senate legislation that would phase out the 600 state-owned liquor stores and raise millions by selling licenses to private businesses. The state also would unload its wholesale business.

Pileggi, who sees liquor and pension legislation as having roughly equal chances of passage in the coming weeks, said his goal next week is to get a liquor bill out of committee “and to continue that process moving forward.”

That’s where it stands, two weeks until the state’s soft deadline. The House has sent the Senate a budget, which the Senate plans to take up the week of June 24. The Senate has sent a major transportation bill to the House, which convened hearings on it in recent days.

“Is it a lot to get done in a couple of weeks? Yes, but there’s been a tremendous amount of work by everyone to advance these issues,” Zogby said. “It doesn’t seem impossible to me that it can’t be done.”

And at the center of it all is a governor who could gain tremendously by demonstrating strong leadership and producing some solid accomplishments. Hold on to your hats.